Jean Chatzky warns Americans on Social Security, 401(k)s | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Preparing for retirement requires careful consideration of numerous factors, primarily centered on maintaining financial security and sustaining one’s preferred way of life.

Key issues include estimating anticipated Social Security benefits and determining how much one can depend on accumulated savings and investments, such as those in 401(k) plans.

Daily costs — covering essentials such as food, utilities, transportation, and recreational activities — play a significant role in shaping retirees’ budgets and drive the amount of money one has available to save and invest for retirement.

Additional concerns include the risk of outliving one’s financial resources, inflation eroding the value of fixed income, and managing continuously rising health care expenses.

Jean Chatzky, the well-known author and former financial editor for NBC’s Today Show, has a strong warning for Americans on Social Security and 401(k)s as U.S. workers prepare for their retirement years.

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Recent reductions in staff have seemingly caused inefficiencies in federal program services, leading to longer wait times for phone inquiries — raising concerns among both current and future Social Security beneficiaries.

A more pressing issue is long-term financial viability. Without legislative intervention, Social Security’s trust funds could be depleted by 2034.

In that scenario, monthly payments might drop to around 80% of what recipients currently anticipate.

With an average Social Security monthly check of $1,976 ($23,712 annually), many retirees find it inadequate for financial security. Additionally, cost-of-living adjustments often fail to keep pace with inflation.

U.S. workers understand the value of retirement savings tools like 401(k) plans and IRAs, even amid market volatility, as they seek to enhance their future income.

Enrolling in a company-sponsored 401(k) plan is a dependable way to accumulate retirement funds, particularly when employers provide matching contributions.

With automatic payroll deductions, this strategy guarantees steady savings without extra effort, offering both simplicity and effectiveness.

Considering these realities, Chatzky shares a warning and offers some recommendations for Americans on both Social Security and 401(k) plans.

A retired couple is seen holding hands and walking on a beach. Former NBC Today Show financial editor Jean Chatzky offers urgent advice on Social Security and 401(k) plans for U.S. workers striving toward a comfortable retirement.

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Jean Chatzky warns U.S. workers on a Social Security mistake to avoid

Chatzky warns people against claiming Social Security too early, as doing so results in lower monthly payments.

For single individuals expecting a lengthy retirement, she recommends delaying withdrawals until age 70 to maximize benefits.

For couples, Chatzky suggests that the higher-earning spouse postpone distributions if at least one partner anticipates a longer lifespan, ensuring greater financial stability.

She also highlights another viable strategy: continuing to work while receiving Social Security benefits. Some people remain employed out of necessity to supplement their income, while others appreciate the sense of purpose and engagement work provides in retirement.

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Regarding retirement savings accounts such as 401(k) plans that are also vital components of one’s retirement income, Chatzky shared another urgent warning.

“You have a 50 percent chance of running out of money in retirement,” she wrote in her book, Money Rules: The Simple Path to Lifelong Security.

Chatzky then offered some advice and how one can cut their odds of this happening to them.

Jean Chatzky suggests a strategy to boost 401(k) values quickly

Chatzky explained her view that automating one’s 401(k) investments and increasing contribution percentages with every pay raise is an effective stategy to get retirement savings moving in the right direction in a hurry.

“If you’ve never saved before and money’s tight, start with 3 percent of your pay — if money’s not tight, start higher — then increase your contribution 2 percent a year until you max out,” Chatzky wrote. “The goal is to be socking away 10 percent a year if you start before your mid-thirties (that can include matching contributions from your employer) and 15 percent a year if you start later than that.”

Simply participating in an employer-based retirement plan decreases the chance of running out of money during retirement to 20 percent, Chatzky clarified.